Mortgage protection insurance
What is it?
Mortgage protection insurance is a policy designed to cover your mortgage payments in case you’re unable to do so due to circumstances like unemployment, illness or accidents and if the property is vacant without any tenants. The insurance typically pays out a set amount for a specified period, allowing you to keep up with payments and avoid defaulting, thereby safeguarding your property investment.
Is it mandatory?
Mortgage protection insurance is generally not mandatory when taking out a buy-to-let mortgage. However, some lenders may strongly recommend it, especially if you have a high loan-to-value ratio or other risk factors. While not obligatory, having this insurance can provide an extra layer of financial security, particularly if you’re concerned about income stability or potential health issues affecting your ability to make mortgage payments.
Landlord building’s insurance
What is it?
Landlord building insurance is a type of coverage that protects the physical structure of a rental property against risks like fire, flood or vandalism. It generally covers the building itself, along with permanent fixtures such as kitchens and bathrooms. It’s regarded as the primary insurance type for landlords as it ensures that the primary investment—the property—is safeguarded against unforeseen damages that could otherwise result in significant financial loss.
Is it mandatory?
Yes. In most cases, having landlord building insurance is mandatory if you’re taking out a buy-to-let mortgage. Lenders usually require this type of insurance to protect their investment in the property. Failure to have adequate building’s insurance may see the lender withdraw the mortgage offer.
Do you need landlord building’s insurance to get a mortgage with Molo
Yes, you’ll need to have landlord building’s insurance in place to get a buy-to-let mortgage with Molo. You won’t need it to begin the application, but it must be set up by the time the mortgage is completed.
Rent guarantee insurance
What is it?
Rent guarantee insurance protects landlords against loss of rental income if a tenant fails to pay rent. This type of insurance usually covers the rent for a certain period or up to a specified amount, allowing landlords to maintain mortgage payments and other property-related expenses even when facing tenant defaults.
Is it mandatory?
No, it’s not a mandatory requirement for getting a buy-to-let mortgage. But landlords can give themselves an extra layer of protection to safeguard buy-to-let investment, especially if you’re heavily reliant on rental income to cover mortgage payments and other costs. While optional, it can offer peace of mind and financial stability in uncertain times.
Home emergency cover
What is it?
Home emergency cover is an insurance policy that provides immediate assistance for urgent issues that may compromise the safety or habitability of a property. This can include plumbing leaks, electrical failures or heating breakdowns. The cover usually provides for the cost of calling out a tradesperson, parts, and labour, ensuring that emergencies are dealt with promptly.
Is it mandatory?
No, home emergency cover isn’t mandatory when securing a buy-to-let mortgage. It may, however, be considered a wise addition to your insurance portfolio. It can help you manage unexpected incidents efficiently, reducing stress and potential property damage. While not obligatory, it can provide immediate help if your buy-to-let property is uninhabitable due to an issue. Most home emergency cover policies also rehouse tenants temporarily while the issue is fixed, potentially saving you on the cost of finding alternative accommodation for your tenants.
Contents insurance
What is it?
If you rent out a furnished property, you may need contents insurance to protect the furnishings, such as sofas, beds and tables. While landlord building’s insurance covers the fixtures and fittings, it doesn’t cover optional items like furniture. This is where contents insurance comes in and can be taken out by the landlord, tenant or both.
Is it mandatory?
Again, contents insurance isn’t mandatory for landlords when getting a buy-to-let mortgage. And if you rent your property unfurnished, there’s little point in taking out this type of coverage. But if you rent a property with furniture included, contents insurance can be helpful, especially because furniture is one of the most easily damaged items in the property.
Life and critical illness cover
What is it?
Life and critical illness cover is a type of insurance that provides a financial payout in the event of the policyholder’s death or diagnosis with a specified critical illness. This can include conditions like cancer, heart attack or stroke and the payout can be used to cover mortgage payments, medical expenses or other financial obligations. It can provide a safety net for the policyholder and their family.
Is it mandatory?
Life and critical illness cover isn’t mandatory when getting a buy-to-let mortgage. That doesn’t mean you shouldn’t get it. Ultimately, it comes down to your personal preferences, but it’s often considered a smart choice for anyone who wants to ensure that their financial responsibilities, such as mortgage payments, can be met even in adverse health circumstances. While not a legal requirement, having this type of cover can offer peace of mind.
Final thoughts: coverage
There are plenty of insurance options available when you own a buy-to-let property. These insurance policies offer a range of benefits, from covering unpaid rent to helping you out when sick. But there’s only one that’s mandatory. Landlord building’s insurance is often a requirement for any lender before approving a mortgage. Something to bear in mind the next time you apply for a buy-to-let mortgage.
